Buying a New Home

 

Starting your real estate journey is often a fun and enjoyable experience but just as in life things aren’t always rosy and simple.  Sometimes you need a little help getting through things.  Having a real estate company behind you that knows how to navigate the tricky world of real estate negotiations, due diligence periods, losing attorneys and the like. 

 

Pre-approval letters

 

  • Contact a mortgage officer before you begin your home search.  This will help you determine how much ‘house’ you can afford.  You can use one of our mortgage officers or you can find any mortgage officer you wish. 

  • You will need to obtain a pre-approval letter from your mortgage officer.  When we submit an offer on a home the offer should be submitted with a pre-approval letter attached.  A pre-approval letter is a method of communication to a seller.  It indicates that you have been “vetted” and can afford to purchase their home.   

  • You should obtain a “hard copy” of the pre-approval letter for a set price i.e. $400,000.  When time allows, we will try to get a pre-approval letter from your mortgage officer for the specific property you intend to purchase. 

  • Make sure to give your mortgage officer’s contact information to your agent before you start looking for homes.  Your agent and your mortgage officer will be working together during your purchase of a new home and it is important that they have a good working relationship.

 

Looking for a new home

 

  • When we start looking at homes we will sign an agreement for 1Red Shoe Realty to represent you during your home buying process.  We will sign a Working with Real Estate Agents brochure, Buyer Agency contract, and a 1Red Shoe Realty addendum.  

  • We will search for and look at houses together.  The best place to start your house search is through your web search portal that we will set up for you. 

  • You should also continue to utilize a web-based search such as www.realtor.com.  When you find houses you want to view, we will set up the showings for you. 

  • We can access any home for sale in the Triangle area, including: For Sale By Owner homes and all new construction homes. 

  • If you find a new construction home please let the onsite agent know that you are working with a real estate agent.  Sometimes the onsite agents can make it difficult for you if you tell them you are not working with an agent and then introduce an agent after the fact. 

  • It is extremely important to utilize a real estate agent when buying a new home or working with a For Sale By Owner.  These sellers often use contracts that are very different from a standard North Carolina Association of Realtors “Offer to Purchase Contract” and these sellers do not represent your needs and interests. 

 

Making an Offer and Contract

 

Offer and Contract                                                                               

  • Your “offer” to purchase a property will be submitted to the seller’s agent in writing.  There are typically several forms to sign and submit when making an offer on a property (Offer to Purchase, Additional Addendum, Mineral Rights and NC Property Disclosure, etc.).  If your initial offer is rejected and the seller gives a counter offer, this process usually becomes a verbal “back and forth” until an agreement is reached (verbally).  Once everyone agrees on the structure of the deal, a new contract is written with all the revised terms are signed by all parties. 

  • When submitting an offer, you may be competing with other buyers and may only have one chance to make an offer.  Under these circumstances we will make sure that you completely understand the offer situation and apprise you of your negotiating position and options.

  • The seller will also want to see your pre-approval letter from your loan officer when an offer is submitted. 

  • Earnest money and a due diligence fee are typically paid as part of a contract negotiation/agreement.  Both forms of payment are negotiable (you do not have to offer any due diligence fee or earnest money but most sellers won’t consider offers without these fees) and can be very important to your real estate transaction.  Due diligence is basically a “payment” to the seller to remove their home from the market while you (the buyer) conduct your due diligence research of the property.  The earnest money is a “good faith” gesture that indicates your willingness to “tie up” and potentially “jeopardize” your money to purchase a home.  Earnest money is typically held by the buyer’s (your) attorney or the listing firm.  This money will be held until closing or until the contract is terminated (situation dependent) and ultimately used toward the purchase price of the property.

  • REAL ESTATE CONTRACTS ARE NOT VALID UNTIL THEY ARE IN WRITING AND SIGNED BY ALL PARTIES.

 

Due Diligence Phase

 

  • Due Diligence Basics: This is the “vetting” phase of your home purchase.  During this phase, you will be completing your loan application, getting your appraisal, home inspection(s), etc.  All “due diligence activities” must be completed prior to the expiration of the due diligence date.  This is a very “fast-paced” period.  If there are still unresolved issues near the end of the due diligence period, we may need to ask the seller for an extension of the due diligence phase or the contract will need to be terminated and renegotiated (terminating a contract is a last resort).

  • Earnest Money Due Date:  When possible, we try to pay the Earnest Money Deposit fee on the due diligence date.  Not all sellers agree with this method, but we have found that it is easier for our buyers.  If the earnest money deposit is due on the due diligence date these funds must be certified.  Make sure your funds are certified when this payment is made.  Your agent will organize the delivery of the check to the party holding the trust funds.

  • Mortgage Loan: Make sure your loan officer has a copy of your contract.  We typically forward the contract to the loan officer but make sure they have a copy within 48 hours of contract acceptance. You need to get your loan process started as soon as possible.  You will complete a lot of paperwork and your loan officer will require you to provide a lot of information regarding your finances.  Make sure you respond to your loan officer as soon as possible.  Not responding quickly to requests can delay your closing.  The loan officer will order an appraisal of the property. 

    • Appraisal: DO NOT delay your appraisal for any reason.  When you apply for your mortgage, you will need to obtain an appraisal.  If your house does not appraise at contract price or higher, the terms of the contract are usually renegotiated.

  • Insurance: Obtain an insurance policy for your new home.  Your loan company and the attorney will work together during escrow to set your insurance escrow account set up (if you want an escrow account).  We will fax a copy of the MLS sheet to your insurance provider if necessary. 

  • Attorney: Select an attorney to close the real estate transaction for you.  The attorney has many things to do during your transaction including: title search, preparing the deed and other forms, organizing the loan package for closing, disbursing monies after closing, etc.

  • Inspections: house inspection, termite/pest inspection, survey, radon, well/septic, engineering evaluation, etc.  We try to schedule all your inspections on the same day.  Running a battery of inspections will be expensive but it is much better to “know what you are buying” and spend some worthwhile money upfront than to skip on a few inspections and find out you have a problem after you have closed on your new home.

    • The most important inspection is typically the home inspection.  You will most likely want to be present at this inspection to talk with the home inspector.  Most often the inspection starts at 9am and concludes sometime between 12 and 1pm.  It is recommended that you arrive for the conclusion of the inspection.  This allows the inspector time to do all his work first and summarize his findings with you at the end of his inspection.

    • Other inspections can be very important and are typically more specialized (the home inspection may determine that more investigation is needed such as a chimney inspection or an engineering evaluation). 

    • We encourage everyone to have a home inspection, radon test, termite inspection, survey, well and septic test, and chimney inspection if applicable.

  • Estimates:  Some issues found on the inspections may need to be repaired or compensation given in lieu of repairs.  If this is the case (it usually is) then the seller may need to obtain estimates for the repair work.  Depending on the complexity of the repairs additional time may need to be added to the due diligence phase to accommodate these activities.

  • Move Planning – If possible, plan your move-in the day after closing.  If you plan to move the day of closing you need to let me know as soon as possible.  Make sure that we talk about the disposition of keys so you can know when you will receive the keys.  Keys are often transferred at closing but the seller is not obligated to give the keys to the buyer until the deed is recorded.

 

Negotiation of Repairs

  • This is the most stressful part of the entire home buying process. 

  • Questions will arise as to whether the house has too many “issues” and you may begin to doubt whether the deal will close or if this house is even right for you anymore.  Keep your eyes on the big picture and don’t get bogged down in some of the minutiae.

  • You may ask the seller to make repairs found on any of the inspections (the seller is not obligated to make any repairs).  All negotiations must be completed and the agreed to repairs “signed-off” before the due diligence period ends. 

  • If the agreed to repairs are not signed prior to the end of due diligence we will ask for an extension or we may need to terminate the agreement and renegotiate the repairs.

  • If the seller does not agree to make repairs as requested, you may proceed with the purchase or you may withdraw from the contract. 

    • If you elect to terminate a contract, the notice of termination must be sent to the seller prior to the expiration of the due diligence date.  All due diligence periods expire at 5pm on the due diligence date.  Notification made after the due diligence date/time may result in forfeiture of your earnest money and other financial headaches.

  • We will conduct a final walk-through to ensure that all repairs have been completed and the house is in good condition prior to closing.  If repairs were extensive, we may request a re-inspection and ask the home inspector to review the items that have been repaired.  We will request a copy of receipts and/or verify that repairs have been made.

 

Closing Day – Preparation and Post Closing

 

Pre-Closing:

  • Contact the utility companies (Water/Sewer, Electricity, Gas/Propane, Cable, Telephone, Garbage collection, etc.) and let them know when the closing date will be.  Let the utility companies know that you are buying a house and the utilities (electricity, gas, water) need to be transferred to your name.  It is your responsibility to make sure that the transfers are set-up and made prior to closing.  Call all utility companies 1 week prior to closing and have all the utilities transferred into your name on the day of closing.

  • Attorney activities: The attorney will compile all the information (loan information, signed contracts, title search, settlement statement, etc.) generated during the transaction and prepare for the closing.

  • Several days before closing make sure you have the correct “wire” information from the attorney and your bank.  NOTE: There are a lot of fraud issues involving real estate transactions and it is imperative that you make absolutely certain that the attorney’s bank account information is accurate.  Make sure that you call and talk with the attorney’s office prior to setting up the wire transfer.  DO NOT set up your wire based on the instructions from an email.  Call the office and speak with a person.

 

Closing Day:

Real estate transactions are often last-minute affairs.  Loan funding is often done on the day prior to or the day of closing.  Closings are often last-minute affairs and a rush to complete. 

  • We prefer to avoid late afternoon or Friday closings if possible.  If there is any delay with your closing it is often necessary to reschedule closing for the following day.  If married; both the husband and wife must attend the closing unless prior arrangements have been made.

    • If necessary “power of attorney” original documents should be provided to the attorney 5 days prior to close if possible

  • Buyers must bring their driver’s license or passport (government issued photo ID).  The attorney requires a photo I.D. to notarize several documents.

  • We will review the closing statement before the closing (the closing statement is a record of all charges and credits that the buyer and the seller incurred during the sale of the house/property).  Your loan company will send the Closing Disclosure to you.  When it is received please forward that document to us so we can review it with you.

    • At the closing, the buyer will be required to bring funds (‘wired’ to the attorney’s office) for the amount due at closing.  In addition, bring a blank personal check if there are any minor adjustments.

    • Once the attorney's office has your required funds, the funds from the lender, and all loan and real estate documents are signed, the attorney will record these documents with the county register of deeds.  This makes everything official and the attorney can then disburse all funds to the seller and other vendors.  

  • Be sure you know how to reach your lender in case they are needed during the closing.

  • There will be MANY documents to sign at closing including but not limited to:

    • Closing Disclosure, ALTA, Promissory Note, Payment Letter, Name Affidavit, Escrow Disclosure, Deed of Trust, Limited POA, Errors, Occupancy Affidavit, Truth in Lending, Itemization of Amount Financed (different lenders require different forms). 

  • The seller is not obligated to give you keys to your new home until the deed is recorded. 

  • Once the documents are signed the deed and deed of trust (if applicable) will be recorded with the local county register of deeds.